IHS cuts chip market forecast again

SAN FRANCISCO—Market research firm IHS iSuppli Monday (Dec. 3) cut its forecast for the 2012 semiconductor market for the third time in just over three months, saying it now expects the chip market to contract by 2.3 percent based on projected shortfalls in most major end markets.

IHS (El Segundo, Calif.) said it now expects total worldwide chip sales to be $303 billion this year, down from $310 billion in 2011. This year is expected to mark the first annual decline in the semiconductor market since 2009, IHS said.

“Five out of the six major application markets for semiconductors—including the key computer segment—are expected to contract in 2012, pulling down the overall performance of the chip market,” said Dale Ford, senior director of electronics and semiconductor research for IHS, in a statement.

“An extremely weak global economy resulted in poor demand for electronics. As a result, the semiconductor industry slipped from stagnation in the first half of 2012 to a slump in the second half," For said. "Still, one of the few silver linings is that the fourth quarter is expected to bring a mild recovery in year-over-year growth, setting the stage for a market rebound in 2013."

IHS' forecast of 2.3 percent contraction is generally consistent with most other market research firms, nearly all of which now expect the semiconductor market to decline in 2012. Last week, the World Semiconductor Trade Statistics organization said it expects the chip market to decline by 3.2 percent this year to around $290 billion.